The 2019 Asia Pacific Banking Insights: Trusting in the Banking Experience highlights the predicament that banks in the region, including Hong Kong face today – customer trust continues to waver despite efforts by banks to promote notions of customer centricity.
According to the study, 61% of banking customers in Hong Kong cite the security and safety of customer data as the thing that matters to them most when engaging with a bank. This could become an even bigger challenge for banks as they roll out products and services that may not necessarily be under their full control – as with third-party partner-led banking solutions.
In addition, 47% rank fast and efficient service as a priority, while 39% cite wanting a minimal disruption of their credit card or account if attempted fraud on the account is detected.
Of the five countries and territories surveyed, Hong Kong is the only one where significantly more consumers trust the government to protect their personal data (30%) than banks (20%). Young people aged 18-24 have the highest trust in banks (26%), but trust rapidly falls with age.
Caught between a rock and hard place
Still, Ian Selbie, industry director Financial Services for Unisys Asia Pacific suggests that banks should treat security as a competitive differentiator, not just a compliance issue. Easier said than done!
A 2018 Accenture report, Mobile Banking Applications: security challenges for banks, revealed that of 30 major banking applications, all have at least one known security risk identified, and 25% of them included at least one “high-risk security flaw.” Their vulnerabilities included insecure data storage, insecure authentication, and code tampering.
Banks are in a bind: on the one hand, they want to improve customer experience but on the other hand, they understand the imperative to secure customer data. To a degree, the regulator is encouraging banks to tackle both at the same time.
As Simon Piff, vice president, IT security practice at IDC, attributes this lack of bank trust by customers is because customers don’t really know what banks are doing with their data. “We entrust our data to financial institutions from the minute we earn our first salary to the time when we retire and everything in between. We assume that the bank will do the right thing by us. We are at a point in time where the banks have to prove that they are doing the right thing by us.”
The Hong Kong Monetary Authority’s launch of the “Cybersecurity Fortification Initiative” included a common Cyber Resilience Assessment Framework and professional development program to increase the supply of security professionals to the industry, and address growing concerns about customer data protection.
At the same time, the government is encouraging banks to comply with the Open Banking initiative where banks are mandated to share data and processes with third parties to provide new services to customers.
Open Banking brings up a new can of worms for banks – partnering with third-party, including non-banks that have little understanding of compliance regulation – may potentially expose banks to unnecessary security risks.
“Open Banking creates a significant shift in several elements of the security and risk landscape for banks. However, the potential benefits of Open Banking include improved customer experience and new revenue streams in a sustainable service model. This research shows that Hong Kong’s banks do not have the trust of the public. As data security is such a priority for customers, banks can build that trust by visibly enhancing their security, compliance and ethical standards,” said Selbie.
Hong Kongers are increasingly frustrated by inefficient bank interactions and not being able to fully complete transactions online. The proportion of customers annoyed by having to repeat themselves to different consultants or bank channels grew from 15% to 21% in the last year – and is higher with the younger the age group. Similarly, those annoyed by online services that require a visit to a branch or printing a form has more than doubled since 2016 to 17% in 2019. Conversely, while long queues remain the top annoyance, it has fallen from 53% to 41% over the last year.
“While Hong Kong banks provide a good digital experience, they still fail to provide a true omnichannel experience across all touch points. And younger Hong Kongers, the growing segment of their customer base, expect online services to be a complete and consistent end-to-end service,” Selbie says.
State of digital-readiness
The vast majority of Hong Kongers are comfortable using voice, face or fingerprint recognition to access mobile banking apps (70%) or facial or fingerprint recognition at an ATM (60%). Slightly fewer (55%) are comfortable using voice recognition when calling the bank’s call center.
However, they are yet to embrace behavioral biometrics with only 47% comfortable with a bank tracking the unique way a person scrolls through websites, types on a phone or presses buttons, to verify identity.
Of those who don’t support using biometrics in banking, most say they are uncertain about the safety of their data once collected (52%) or are concerned about biometric data being stolen (49%).
Click on the video and learn further Piff’s video on how banks are evolving their data privacy and security strategies.